According to the Bank, asset quality will be greatly affected if all the banks raise fresh capital as a way of meeting the minimum capital requirements. Ms. Dzifa Amegashie, Head of Investor Relations at CalBank Limited, speaking at the Bank’s second and last ‘Facts behind the Figures” session at the Ghana Stock Exchange, said there was a potential of between five to nine billion cedis that could come into the sector from banks meeting the requirement; an amount which could cause future loan impairments if not well utilised.

This, she said, was more pertinent due to the asset quality issues brought on high Non-Performing Loans (NPLs) in the industry and Banks’ inability to grow their loan books.

The BoG in September announced new GHC400 million minimum capital requirements for Banks, to be met by December 2018. Banks are expected to raise the amount by raising fresh capital, capitalising their income surplus or both.

Ms. Amegashie said the Board and Management of CalBank were currently going through the options to see which would be the optimal solution for the Bank, however there are concerns about what fresh capital may do to future returns if it had to raise fresh capital, especially with the Bank’s capital adequacy ratio over 22 percent and the potential risk to asset quality.

“Undoubtedly, until the asset quality issues are resolved, we fully expect that all of this money chasing a few transactions, will result in increased impairments,” she stated, but assured that the Bank would have a proposal on how it intended to meet the requirements by end of November, 2017 as stipulated by the Bank of Ghana.

Mr Frank Adu Junior, Managing Director of Cal Bank, explained that the new capital will come from shareholders who will be looking for return on equity on capital employed thus managers of banks will pushed to deploy this fresh capital in order to give their shareholders this return on equity.He noted that if care was not taken, they would be booking bad loans as the market will have nowhere else to put these monies but mainly into loans and advances, and other investments.

“Anytime you deploy capital rapidly, you’re bound to make mistakes,” he said and advised banks to be careful in deploying the capital otherwise they would be writing them back into bad loans 18 months down the line. Mr Adu further added that CalBank was confident of its ability to raise the minimum requirement by itself, by the 2018 deadline.

He noted that while it was open to partnering with another bank if it found one, it did not necessarily need to do so in order to meet the requirement. “If we find a willing bride; we shall marry, if not, we do not need to get married. We will meet the capital requirement by ourselves,” stated.

Giving highlights of the Bank’s third quarter performance, Mr Phillip Owiredu, Executive Director of CalBank, said the Bank recorded an increase in Profit Before Tax of GHC156,695 million, an increase of 13.2 percent over same quarter 2016. Profit after Tax also went up 25 percent from GHC90,920 million in the third quarter to GHC113,641 million in the quarter under review.

At the same time, impairment loss increased by 46 percent from GHC33.6 million to GHC49.1 million. Mr Kofi Yamoah, Managing Director of the Ghana Stock Exchange (GSE) commended CalBank for its commitment to the ‘Facts Behind the Figures’ series, adding that the GSE was looking at ways to amend its rules to make it compulsory for all listed companies.

He said financial services, especially banks, constituted a major section of the market thus everything that happened in that market was of interest to the GSE.